Companies that invest in customer experience typically see a return on their investment. Customer experience is about more than just a customer service call or a good product. It’s about the entire process of interacting with a company, from the point of discovery to the point of purchase and beyond. The cost of poor customer experience goes far beyond what it costs to make an acquisition. In fact, research shows that unhappy customers are 3x as likely to switch brands as happy customers. To make matters worse, this type of churn can lead to a loss in revenue for your business up to 20% annually. So why do companies invest in customer experience? Turns out there are many reasons they should!
The Cost of Poor Customer Experience
For a company to stay competitive, a successful customer experience is absolutely essential.
People who are dissatisfied with the product and the service are less likely to recommend the company to friends and family, and they are less likely to start up a new customer relationship. The key to retaining customers is creating a connection that’s consistent with what the customer wants. The first step to building a great customer experience is to establish the right rapport.
Great customer service makes it easier to establish rapport and trust, while delivering consistent quality and satisfaction.
Losing customers is costly. Losing 1% of your customers each year costs your company $70,000 – $2.1 million depending on how big your company is and how your customers are performing. If a company is losing its best customers each year due to a poor experience, that cost can add up very quickly. There are two other factors to consider when assessing the cost of poor customer experience. The first is opportunity cost, or the opportunity cost of potentially acquiring a new customer who might have been a better fit for your brand. Every company loses opportunity cost every time they ignore the customer. The second is neglecting the customer experience for the sake of profits. If you keep ignoring your customers, they will eventually stop doing business with you, leading to lost revenue.
Why Companies Should Invest in Customer Experience
Customer service is critical to any brand’s success. You want your customers to come back and recommend your brand to others. However, most companies don’t invest in their customer experience as much as they could because they don’t know how it is influencing customer loyalty. You can improve your customer loyalty and retention in the long-term with a well-designed and branded customer experience.
The customer experience directly impacts the way your employees interact with customers, and the way they interact with each other. For example, the interaction between employees and customers can lead to complaints and discontent, which can impact employee morale and customer engagement.
In any business, from a small startup to a Fortune 500 company, creating and nurturing a positive customer experience is imperative. Even if you aren’t a technology company, investing in customer experience helps you become better. This is why so many Fortune 500 companies invest in customer experience initiatives to bring their customers a greater level of interaction. They want to be a part of the customer’s journey and ensure their customers are satisfied, so the customers stick around and make that brand successful.
Measure the ROI on Customer Experience
If you’ve ever done any kind of project for a large corporation, you know there is always some question about the ROI. “If we invested X amount of money in our web presence, and we didn’t see any difference in our web traffic after that, is the ROI still worth it?” Many times there is no real way to answer that question. However, measuring the ROI of a customer experience strategy is extremely straightforward. You can measure the net increase in a firm’s revenue (new customers and/or higher spending) to show that your customer experience strategy has led to a return on investment. In the same way that it’s simple to measure the ROI of the web presence, it’s easy to measure the ROI of your customer experience strategy.
When analyzing how much customers value customer experience, businesses tend to look only at financial data. However, many of these companies fail to account for the emotional attachment that customers feel toward brands. This emotional connection helps customers with making more decisions based on their emotions and more likely to buy. In fact, an Engagement Economy study found that up to 65% of customers will even switch brands if it means they receive a better customer service experience.
When evaluating whether or not to invest in customer experience, organizations should be asking if customer experience can enhance their product, company and brand value.
What to Invest in?
In order to invest in customer experience, your focus should be on your customers. Customers aren’t all alike and this fact can be overwhelming. Fortunately, there are things that customers do share:
Your customers want to trust you. To them, if you don’t meet their expectations, then your product or service falls short. Since this is a universal feeling, it is an easy place to start investing in customer experience. Consider what it means to be trustworthy. What does it mean to be honest with your customers? There are four dimensions that define the word “trust”:
Physical Trust: Can customers feel safe gathering in groups or going to places where all resources are shared and touched by many?
Emotional Trust: Can customers trust that the company will tell the truth regarding products and services? Are they treating their workers well?
Financial Trust: Can customers trust that the company will not exploit or take advantage of crisis?
Digital Trust: Can customers trust that cybersecurity is priority and that their transactions, information, and personal data are secure and private?
Every company is made up of people, from owners to employees. As such, customer experience is about making sure the right people are empowered to make the right decisions. This means taking a step back and truly understanding your customer and their needs. Develop a relationship with customers through face-to-face interactions and feedback. From this understanding, develop a plan of action for how to get what they want.
A lot goes into the way we as humans experience the world. Humans are emotional. This means your customer needs to feel connected to the brand. This means giving them the right information at the right time. If you offer bad customer service, they will feel disconnected from the brand and may not be as loyal to it.
Companies are in business to provide solutions, products and services. While the acquisition is the initial focus of a company, the customer experience is about much more than what happens during the purchasing process. A company’s success depends on how it relates to its customers from the first moment a customer speaks with a sales representative. Beyond buying, a company’s success can depend on how it values the customer. Companies can respond to this shift in power by investing in a more human, authentic customer experience.
The ability to empathize with others means recognizing the emotions behind different situations. Research shows that this skill can make up to 67% of job performance.
People want to do business with brands that are easy to do business with. When things are complex, customers naturally look for solutions outside of their current relationship.
In order to reduce costs and increase efficiency, businesses have learned that investing in operations can help them reduce costs. However, these cost savings can often be passed on to customers, leading to an increase in customer loyalty.
Customer segmentation helps businesses discover the best customers for their products or services. By focusing on customers in specific segments, companies can anticipate what problems they’ll face and what solutions they’ll need to find.
Because customer expectations have changed so much since companies became profitable, there are plenty of misconceptions about what customers want and what they expect in today’s environment. Although both are vital for companies to understand, most businesses run at a disadvantage because they do not have to consider customer expectations during the design phase. Instead, the company is focused on a product or a service. Yet this is where the problems begin.
The bottom line is that the same product that satisfies customers today is unlikely to do so in the future, due to shifts in technology, market conditions and customer expectations. A company must acknowledge and take into account that as it approaches a new product or service, the current product will likely not suffice.
Technology is a powerful tool for driving sales and creating customer engagement. But most companies don’t invest in it because of the expense. But there’s a lot you can do to cut that cost and create a positive customer experience. Technology solutions can cut costs for you and boost the return on your investment. There are many options out there, from self-service phone support to mobile app technology to dynamic pricing. Choosing the right technology solution can really make a difference.
Customers expect to have the information they need at their fingertips. There is nothing worse than a company’s website that offers little guidance or lacks necessary information. That can mean lost sales or abandoned transactions.
A large number of customers today are actively looking to cut the traditional retailers from their communication stream and search for more personalized marketing tools to make purchases.
For example, using Facebook can allow customers to do research before making a purchase, and companies like Amazon rely on customer feedback for product recommendations and to continually expand their product inventory.
Not only are there now more ways to reach customers, there are more ways to provide them with personalized content. For example, a customer who loves fitness brands will likely gravitate toward a healthy lifestyle. Consider how smart companies are with using content marketing to not only keep consumers engaged, but educate them, as well.
Customers want and need a good customer experience. Companies that provide them will have the most loyal customers. However, to make this happen, companies need to invest in customer experience at all levels. As your company grows, it’s important to remember that you have customers with every level of experience in the relationship.
In closing, the best way to create a strong customer experience is to have a consistent customer focus across the entire organization. This means involving everyone throughout the customer life cycle to create a true culture of customer experience.